As others have already pointed out and summarized, the proposed auditing standard on supplemental information and the two attestation standards for compliance or exemption reports are in direct response to the Securities and Exchange Commission's proposed amendments to SEC Rule 17a-5 and facilitate the ability of the PCAOB to implement oversight of independent public accountants of brokers and dealers as required by the Dodd-Frank Act.

The need to improve the oversight of the auditors of the approximately 5,000 SEC-registered brokers and dealers was required by Congress as a result of the Madoff scandal and other notable frauds where billions of dollars of investor assets were embezzled.

Without going through the technical requirements of these proposals, I believe that they strike an appropriate balance between enhancing investor protection and the costs of implementing new standards, but I also look forward to comments, and reaction to the scalability of these standards.

As Keith Wilson mentioned, the proposed standards emphasize coordination between the audit of the financial statements and related supplementary information and the attestation of the compliance or exemption reports. This coordination is designed to reduce redundancy in the audit process and help to hold down costs. They also include requirements related to the auditor's consideration of fraud risks, including the risk of the misappropriation of customer assets. In addition, they establish a risk-based approach for the examination, focusing the auditor on matters that are most important to the auditor's conclusions regarding the broker or dealer's assertions and, importantly, are designed to be scalable based on the broker or dealer's size and complexity.

While the primary user of the financial statements and compliance reports of brokers and dealers may be different from the users of issuers' financial statements, the objective is the same — to protect investors. With that in mind, I look forward to receiving comments on these proposed auditing and attestations standards.

In closing, I would like to join you, Mr. Chairman, and the others in thanking Marty Baumann and his staff, Keith Wilson and Barb Vanich, Bob Maday from the Division of Registration and Inspections, and Bob Burns and Nina Mojiri-Azad from the General Counsel's Office for their efforts in developing these proposed standards.